Magnho José, President of IJL Brazil

"Brazil's gaming and betting market shows significant progress, but it could be better"

Magnho José, President of IJL Brazil and Editor of BNL DATA.
Reading time 5:34 min

In an exclusive analysis for Yogonet, Magnho José, a journalist specializing in lotteries, games, and betting, editor of the portal BNLData, and president of the Brazilian Legal Gaming Institute (IJL), shared his vision of the legal situation of gaming in Brazil, and the market's expectations for the immediate future.

We share his analysis here:

Due to the collection urgency and the existence of a 'social fact' due to the large supply of unregulated gambling in the country, we believe that we will have significant advances in 2023. 

The Brazilian gaming and betting market and lotteries registered significant advances in 2022 with the approval of PL 442/91 by the Chamber of Deputies, but it could have been better if sports betting had been regulated in time. The lottery market also witnessed important news for both players and operators.

Following the decision of the Supreme Court, which guaranteed that the entities of the Federation (states and municipalities) also have the competence to operate lottery services in their territories, through the same modalities defined by federal legislation (numbered lottery, numerical prediction lottery, sports betting lottery, instant lottery and the modality of fixed odds lottery or sports betting), several state and municipal lotteries were created.

At the federal level, this year the Health and Tourism Lotteries were created by law, which will allow the Caixa Economica Federal to operate numerical prediction, sports, and fixed odds lotteries, with profit percentages much higher than those of the current products managed by the entity.

After almost three years of the COVID pandemic, 2022 began with the resumption of in-person proceedings in the Legislative and, even before Carnival, exactly on February 24, PL 442/91 was approved by 246 votes to 202, by the plenary session of the Chamber of Deputies.

If we had to point out the most important achievement of 2022, it is without a doubt the approval of the proposal that legalizes casinos in resorts, as well as bingo, betting, and online gambling by the Chamber of Deputies. This is a great advance this year for the sector.

We could list several reasons to highlight its importance, but the main one is the fact that passing a proposal in the House is much more difficult than in the Senate.

First of all because of the number of members, since the House has 513 deputies, compared to 81 in the Senate, and also because the House is more diverse, and has more conservative and religious deputies.

From the political point of view, it should be noted that the approval of PL 442/91 should be attributed to the Speaker of the House, Deputy Arthur Lira.

President Jair Bolsonaro, who always opposed the legalization of gambling, threatening to veto the proposal if approved by Congress, did not help or hinder the vote, since the agenda was defended by the Speaker of the House.

PL 442/91 was submitted to the Senate after Carnival, exactly on March 4. The proposal remained on standby at the Federal Senate President's desk, Senator Rodrigo Pacheco, until August 10, when it was published in the Federal Senate Gazette, and assigned to the Plenary.

The presidential and legislative elections in Brazil kept the processing of the proposal at a standstill in the Senate, although with some promises that the bill would be analyzed after the October elections. With the end of November and the election of President Luiz Inácio Lula da Silva for a third term, other priority agendas occupied the political environment and the Congress, keeping PL 442/91 shelved.

In addition, different interest groups worked to ensure that the bill would advance in the Senate without changes to the text approved in the Chamber of Deputies, while other political actors argued that the proposal should be adjusted and improved to meet the needs of the country and the market. Another factor of concern was the lack of certainty in the approval of PL 442/91 since the current composition of the Senate is very conservative and religious. 

Among the senators elected in the last election, there are at least two who strongly oppose legalized gambling, but others who oppose it were not re-elected, and those elected favored legal gambling as well. Even with the changes, the assessment is that it may be less difficult to pass the gambling legalization bill in the next Senate legislature.

Before the first round of elections, we commented that we had no guarantee that former president Lula would be the best choice, all we had was the certainty that the Jair Bolsonaro option would make it difficult to advance the legalization and regulation of the sector in the coming years, especially since the president has a pastor as an advisor, the commitment to the evangelical and conservative bench of the refrain 'God, country and family'.

President Lula has spoken out several times in favor of the legalization of gambling, but after the scandal involving a businessman of the sector with a government representative at the beginning of his first term, in 2005, Lula and the Workers Party (PT) have avoided addressing the issue publicly.

Legalization became a cursed agenda for the party during the 13 years of the Workers' Party government, and the sector suffered a period of promises and mistrust, which generated a major setback for the gaming industry.

After the approval of PL 442/91 in the plenary session of the Chamber of Deputies, a senior parliamentarian of the Workers Party and with direct contact with Lula asked him his opinion on the legalization of gambling, and the former president promised to respect the decision of the National Congress and to sanction the proposal that was approved by the parliamentarians.

Therefore, the defeat of President Jair Bolsonaro may also be a positive factor for the gambling legalization process, since the current president has always served the evangelical bench to prevent any progress on a proposal to legalize gambling in Brazil.

Sports betting

President Bolsonaro's ties with conservatives/evangelicals prevented the president from regulating Law 13,756/18, which legalized fixed odds betting or sports betting.

The deadline foreseen in the law for regulation expired on December 12 of this year and, despite calls from the Civil House and the Ministry of Economy, for the government to issue the necessary regulation to regulate such modalities, Bolsonaro preferred omission to comply with his base and did not regulate the Law.

In a TV interview after the elections, the communications coordinator of President-elect Lula's campaign, Edinho Silva, defended the regulation of gambling and betting, so that the resources could be applied to education and educational infrastructure.

In addition, the need to regulate gambling and the legalization of gambling was discussed in the Transition Cabinet of Lula's government, which reportedly received information on the failure of the current government to issue the necessary rules to regulate the modality.

The speaker of PL 442/91 in the Chamber of Deputies, and member of the Transition Cabinet in the area of tourism, Deputy Felipe Carreras, discussed the legalization of gambling in a conversation with the vice-president-elect, Geraldo Alckmin, coordinator of the transition.

Carreras listed the importance of approving gaming in the country, and repeated the data of collection, investments, and jobs that can be generated, among others, and talked about the resistance of evangelical sectors in Congress.

We can say that the gaming and betting market in 2022 had big losers and some winners. The winners were the unregulated operators and offshore sports betting, which were not obliged to pay taxes in the country. The big loser was the State, negligent and incompetent in legalizing, regulating, and collecting from this sector.

The real challenge for the Executive and Legislative powers is the creation and establishment of laws and regulations that allow citizens to pursue their desire to gamble under the watchful eye of rules clearly defined by the State and their effective enforcement.

When talking about the legalization and regulation of gambling and betting in Brazil, one often hears an expression that has even become famous: "Now it's happening!". And due to the urgency to collect taxes and the existence of a 'social fact', because of the great offer of unregulated gambling in the country, we believe that we will have significant progress in 2023.

Unfortunately, we do not have elements to define a precise date when gaming in Brazil will be totally legalized and regulated because there are political factors that cannot be controlled, but the only certainty we have is that the advanced stage of processing of the proposal that can legalize gambling in the country, makes the process irreversible and unpostponable.

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